When you first get started in the world of real estate, many people will tell you to become a wholesaler. This might actually seem like a good idea at first glance. Wholesaling is similar to filling houses. The difference is that you don't have to do any rehab work to get the house back in shape. All that you need to do is strike a deal with a seller and find another investor interested in buying the property. While wholesale deals don't generate as much profit as house flipping, they also don't require as much effort on your part. As you're never actually taking possession of the house, you're just buying a contract, then moving on to sell it immediately. But just as we say in our Tarek & Christina Seminars, real estate wholesaling isn't as simple as it looks like. Some people may find it an ideal way to get started, but it's not a perfect solution for everyone. You need to take a closer look at everything that's involved so that you can make a more informed decision. Learning Is Highly Important Some people believe that wholesaling gives them the opportunity to skip the entire learning curve that is associated with real estate investing. They may think they can get started right away instead of taking time at the beginning to learn about how the real estate world works, house rehab and marketing strategies. Thinking that you can learn as you go along and skipping the initial learning face will often prove to be a costly mistake. On the other hand, if you've attended Tarek & Christina Seminars and have taken the time needed to learn what you should know about flipping, yet are still hesitant to go that route, wholesaling can be a good option. If you know how things work, how to obtain funding and how to spot motivated sellers, you can get started with wholesaling.
However, you should know that it's still possible to get in over your head. For example, if you haven't looked into how to find investors willing to take over a property when you were researching house flipping. Many people see wholesaling as easy, as it's a more "hands-off" process. But once you've made a deal, you'll need to take action quickly to flip the house if you're hoping to make a profit. In order to achieve this, you'll need to have a list of flippers who you can contact to buy the property. But when you're the one flipping the homes, you don't have to build a list of investors, as all that you need to do is to find some leads, rehab the properties you've found and sold them on to interested buyers. Figuring Out the Values of Your Properties Can Be Challenging If you're skilled in marketing and networking, building a solid list of buyers may not be that hard. But there's another part in the wholesale equation that can be just as difficult: figuring out how much your wholesales are worth. Whether you'll be the one rehabbing and flipping the property or you just want to quickly wholesale it, you'll need to obtain an estimate of the rehab costs and the property's after-repair value (ARV). Some real estate experts believe that those interested in flipping houses should get started by wholesaling, as it allows them to gain experience in estimating these numbers without the potential of actually going over a rehab budget like during a flip. No matter what kind of real estate investor you become, you'll end up acquiring some useful skills while on the job. You should think of the differences between flipping and wholesaling, do your research and then get into the type of investing that you think is most suitable for you. Wholesaling doesn't make the same kind of money that flipping houses does, but it can nonetheless be a good choice for some investors.
We've all seen the "Ugly House" billboards that shout to the world, "We Buy Ugly Homes." There is a reason this business continues to profit all over the country. There is money to be made in ugly houses. The popularity of the house flipping business opportunity has encouraged numerous TV shows and other learning opportunities such as Tarek & Christina Seminars. The enthusiasm surrounding this business opportunity is palpable. Investors should be forewarned though. Without a good business plan, you can lose a lot of money. Real estate investment success relies on an investor's ability to buy low and sell high. As the old adage states, the devil is definitely in the details. Many real estate investors claim that the money is made based on the price of the initial purchase. Identifying and selecting the best homes to flip based on attractive margins is critical. That's why ugly houses offer a viable buying option for hungry investors in search of their next deal. Below are the reasons investors love ugly houses. 1. There is less buyer competition. While there may be some competition from investors for ugly homes, there won't be too much competition from retail homebuyers looking for their next home. This fact automatically drives the price down as house flippers drive the prices down from a retail price point to wholesale pricing. There is no denying the fact that investors seek profits as their main motivation, but scheduling issues, preferred zip codes and other factors guide investor decisions too. 2. The price of an ugly house is often depressed for identifiable reasons. A common scenario responsible for the ugly house phenomenon is that a home is older and has not been updated like other homes in the neighborhood. This keeps the price down since most homebuyers don't want to spend the money and time required to update the home. This means the price will be much less than a similar home that has new appliances and upgraded finishes. 3. Ugly homes are easy to identify as possible deals. As mentioned earlier, finding a good deal is about identifying the best opportunities. Ugly homes stand out. These undesirable properties often sit on the market for awhile as sellers try and sell their home for higher prices than the market will support. Sometimes it takes unrealistic sellers some time to realize that their home is indeed an ugly home and will not command a retail price comparable to other homes in the area. At that point, sellers start considering their options. This timeframe is when sellers are open to negotiating with investors 4. Inexpensive cosmetic changes can bolster profit margins significantly. The good news for investors is that many of the best investment properties only need cosmetic repairs to transform them from an eyesore to a desirable family dream house. Learning what to look for as an investor is extremely important. Tarek & Christina Seminars can teach anyone about how to evaluate properties. Simple fixes such as landscaping, new kitchen cabinets and a paint job can sometimes turn an ugly duckling into home sweet home. 5. There are well-built, ugly houses available in popular zip code areas. Location is everything in real estate. Ugly homes are often located in highly desirable neighborhoods. Some of the best profit margins can be found in these locales. Since ugly homes often come on the market as the result of an older couple needing to sell, many of these homes are in great neighborhoods and are only considered subpar because they have not been updated. Large margins found in popular neighborhoods can be gold for investors. Ugly homes turn profits for astute investors who know how to transform them into sweet properties. Identifying these diamonds in the rough is crucial for investor success. There are undeniable reasons for tapping into this profitable market.
